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Former Member

Negative amortization

Dear SAP expert,

We have a case that we would like to amortize the front-end fee over the life of the deal.

Our product is interest rate instrument. And we enter the amount of front-end fee as other flow.

The reason is because this flow will come after the nominal. That's why we don't tick permit "premium/discount".

However, even we try to set effect of update type as 1011, 1014, 1015 for investment transaction, the amortization is always negative (V303).

We enter the front-end fee as positive since it's an investment (loan given).

Posting TBB1 -> Dr Bank clearing Cr Unamortized (B/S)

Posting TPM1 -> Dr Income (P/L) Cr Unamortized

Since amortization is calculated as negative, then posting of TPM1 will be as above.

How can we achieve to get positive amortization?

Please help suggest.

Rgds,

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1 Answer

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    Former Member
    Aug 06, 2012 at 12:24 PM

    Hi

    Based on the query mentioned above , since you are issuing a loan with premium as per the standard the premium is getting undergoing a negative amortization , if the loan is issued with the discount then positive amortization can be achieved . can you please provide the requirement why you want want achieve postive amortization for the loan which is issued with premium

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